Arun, the founder of Southern Auto Recyclers Pvt. Ltd. in Chennai, still remembers the day a logistics operator walked into his small office with a problem he couldn’t ignore. The operator had a fleet of ageing trucks failing fitness tests, burning more fuel than they earned, and no compliant way to dispose of them. That conversation pushed Arun to understand how quickly Tamil Nadu was shifting toward greener, safer mobility.
If you’re exploring a similar opportunity, this guide will help you understand how to set up a vehicle scrapping plant in Tamil Nadu—from ideal locations and approvals to machinery, CAPEX, compliance, and the path to becoming an RVSF (Registered Vehicle Scrapping Facility).
Tamil Nadu has long been known as the “Detroit of India,” thanks to its concentration of automobile, component, and electronics manufacturing. The Chennai–Sriperumbudur–Oragadam belt, Hosur industrial zone, and Coimbatore region not only produce vehicles but also create a strong future pipeline of end-of-life vehicles (ELVs).
A large number of passenger cars, two-wheelers, commercial fleets, and government vehicles reach their end-of-life every year. This creates a stable raw material supply for any organised vehicle scrapping facility.
Why this matters to an investor:
In short, Tamil Nadu offers the kind of feedstock stability very few states can match.
Choosing the right location decides how easily ELVs will reach your facility. Tamil Nadu’s industrial layout offers four particularly strong hubs:
A dense cluster of OEMs, component factories, and fleet operators. Excellent road and port connectivity. Higher land costs but unmatched access to consistent ELV supply.
A strategic zone near the Karnataka border. Ideal if you’re targeting both Tamil Nadu and Bengaluru markets. Particularly good for commercial vehicles and logistics fleets.
Known for MSMEs, engineering industries, and textile logistics. Steady inflow of two-wheelers, cars, and commercial fleets from Coimbatore, Erode, Tiruppur, and Salem.
One of the biggest strengths of Tamil Nadu is the diversity of ELV sources. With the right partnerships, you can build a steady pipeline.
Manufacturers often scrap test vehicles, pre-production units, R&D mules, accidental vehicles, and warranty write-offs. Working with them requires strong documentation and data security practices.
Cities like Chennai, Coimbatore, Tiruchirapalli, Madurai, and Salem generate thousands of ageing cars and two-wheelers every year. Many owners prefer certified scrapping facilities for safer disposal.
Transport companies, cab aggregators, staff bus operators, and school fleets replace vehicles on fixed cycles. They prefer compliant RVSFs for clean documentation.
Departments and PSUs periodically scrap their fleets through tenders. RVSFs with proper documentation and financial capacity can participate in these auctions.
A mix of long-term MoUs and open-market sourcing is the most sustainable strategy.
Setting up an RVSF requires two regulatory pathways: environmental approvals and transport department approval.
You will need:
Under the Vehicle Scrappage Policy, only registered RVSFs can legally dismantle vehicles and issue scrappage certificates.
You must demonstrate:
A well-prepared application significantly reduces approval timelines.
Your equipment setup determines your plant’s safety, throughput, and acceptance by OEMs and regulators.
A plant designed for 25–40 vehicles per day often sees:
Higher capacity or CV-focused plants may require heavier lifting equipment, increasing CAPEX but also improving margins.
Tamil Nadu’s industrial and sustainability policies often support green projects such as recycling, EV-related infrastructure, and circular economy ventures.
Depending on eligibility and policy cycles, benefits may include:
Positioning your project as a safety-focused, environmentally sound facility can help secure these advantages.
Several factors are pushing vehicle owners towards scrappage:
India’s ELV and dismantling industry is also growing rapidly, creating long-term business potential for organised, compliant scrapping facilities.
A modern ELV facility must focus heavily on environmental protection and workforce safety. This not only helps obtain approvals but also builds trust with OEMs.
A practical roadmap for setting up a vehicle scrapping plant in Tamil Nadu:
Assess ELV availability, competitor landscape, logistics cost, and target vehicle mix.
Shortlist industrial plots with good access, utilities, and compliance potential.
Include layout, machinery, manpower, revenue projections and environmental plans.
Submit project plans, process details, waste management strategy, and layout drawings.
Submit your infrastructure, machinery, SOPs, digital systems and compliance documents.
Construct dismantling bays, storage, hazardous waste area, admin block and vehicle lanes.
Demonstrate safe depollution and dismantling processes during inspection.
Sign sourcing MoUs, optimise throughput, and track material recovery efficiency.
With proper planning, most facilities can move from concept to commissioning in 6–12 months.
| Year | New Vehicle Registrations | Business Insight |
|---|---|---|
| 2021 | 15.1 lakh approx. | Growing ELV base in coming years |
| 2022 | 17 lakh approx. | Wider sourcing pool |
| 2023 | 18.2 lakh approx. | Urban clusters strengthening |
| 2024 | 19.5 lakh approx. | Strong long-term scrappage pipeline |
Insight: Rising annual registrations ensure a consistent long-term stream of ELVs.
| Year | Estimated Market Size | Comment |
|---|---|---|
| 2023 | ~USD 6 billion | Baseline of organised ELV industry |
| 2030 | ~USD 18.5 billion | Strong policy-driven expansion |
| CAGR | ~17–18% | High-growth sunrise sector |
Insight: Tamil Nadu-based RVSFs tap into a rapidly expanding national opportunity.
When done right:
When compliance is ignored:
Early compliance is not a cost—it is a business advantage.
Tamil Nadu offers one of India’s strongest ecosystems for a vehicle scrapping facility. With a dense vehicle population, powerful manufacturing clusters, and increasing pressure for safe disposal of old vehicles, the opportunity is both commercially strong and environmentally significant.
A well-designed, compliant vehicle scrapping plant in Tamil Nadu can deliver sustainable margins, long-term feedstock security, and a strong reputation in the automotive circular economy.
If you’re planning this journey, building the right roadmap from day one makes all the difference.
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Let us guide you through location selection, DPR, TNPCB approvals, machinery planning, and RVSF registration.
Around 1–3 acres for a 25–100 vehicles/day plant, depending on layout and vehicle mix.
No. You must obtain the CTO and RVSF approval before scrapping any vehicle.
Cars, two-wheelers, commercial vehicles, government vehicles, and accidental vehicles, as long as processes follow prescribed norms.
They help with deregistration and may qualify vehicle owners for manufacturer discounts or state incentives.
Yes. We support investors across India with feasibility studies, DPRs, TNPCB approvals, RVSF documentation, and full compliance hand-holding.
